The volume of Malta's exports remained unchanged in the first half of this year but value was being shown as having dropped by Lm82 million because of the fluctuations of the US dollar, Malta Enterprise chairman Joe Zammit Tabona told a parliamentary committee.

He explained that Malta's main exporter, ST Electronics - as well as some large Maltese companies, marketed and sold their products in dollars, which had depreciated some 30 per cent during that period. However the volume of their exports remained the same.

Industry and Public Investments Minister Austin Gatt said the predominance of ST could be felt in all statistics. However the company had favoured Malta over Singapore and was asking for more land for expansion. It also recently opened a new Research and Development firm here employing 60 people.

The comments were made when the Public Accounts Committee discussed the 2004 annual report of Malta Enterprise.

During the debate Mr Zammit Cutajar and Philip Micallef, CEO of Malta Enterprise underscored the importance of a double taxation agreement to attract investment from the United States.

They said ME has closed down its office in Washington because it was not found to be effective. However, the enterprise was now more focused and its activities were already reaping results. US oil and gas companies which had returned to North Africa were being lured to set up support facilities in Malta and use the island as a regional base.

Mr Zammit Tabona said that ME had changed working methods and instead of organizing road shows, it opted for one-to-one meetings with would-be investors from Italy, Germany, France, the UK, Ireland and Spain. A Spanish family had, in the past two years invested some €50 million in two pharmaceutical factories which would start operations later this month. Six pharmaceutical projects had been approved and more would come on line this year. Interest in this sector from Europe and India was promising.

Mr Tabone said that outsourcing was being made from the UK in the ICT sector, an automotive company from Germany had invested in Malta and a UK car assembly plant had been attracted to open up here.

Malta Enterprise was satisfied not only with the investment achieved but also with the fact that some existing companies were expanding.

Pharmaceutical companies were being attracted to Malta because of local patent legislation rules, under which they could enter the market within 24 hours. It was reckoned that a company which entered the market first was guaranteed 30 per cent of the market share.

Malta was seeking to exploit this patents advantage - which in terms of the Boller exemption expires within 16 years - and was using it to attract R&Ds and laboratories, because once companies set up these in Malta, they would anchor their activity here and would find it difficult to close shop because of their solid base. Other support services, like packaging and printing firms, were also benefiting from the activities of the pharmaceutical industry.

Mr Zammit Tabona said that Malta enjoyed its best investment year in 2000, with investment reaching some Lm70 million. Since then, the average has been about Lm30 million and this trend was set to continue. An advantage which firms in Malta had was that launch to market time was far shorter from here than in China. This applied not only to pharmaceuticals but also to textiles and electronics.

Malta was also attractive because of its diligent, flexible, efficient and multi-lingual workforce.

Mr Micallef said that apart from the office in Washington, Malta Enterprise had also closed down one of its two offices in Germany. The office in Milan had been downsized and would be transferred to a less expensive area when the lease expired.

Some Lm300,000 in administrative expenses were saved in 2004 and a further saving of Lm200,000 were earmarked for this year. The enterprise was also engaging multipliers - people who worked solely on commission basis according to their success in attracting investment to Malta and the number of workers these companies would employ.

In his comments, Dr Gatt said industry in Malta had an important role in the economy. Many companies were expanding and two Maltese-owned firms in San Gwann had become the fifth largest exporters. The prospect for the food and health sectors for the next three years looked promising.

Dr Gatt said that the government believed in a viable industry. It did not believe in subsidies, free land or soft loans. It believed in an industry which could stand global competition. He was sure that there would be some companies that would fold up but it was now Malta Enterprise's task to attract new and different investment to Malta.

"Unfortunately, there were still politicians, unions and others which are still living in the past. They should embrace the reality of change."

Mr Micallef said EU membership gave greater credibility to Malta with US investors regarding standards. He said that Malta was being sold on the basis that it was a strategic place to work from if one wanted to penetrate European markets. Maltese industry had benefited from two schemes under ERU structural funds worth €1.3 million and plans have already been submitted for the second tranche.

Malta Enterprise had also entered into an agreement with the EU Investment Fund which was underwriting 50 per cent of all the loans which ME approved. Thirty per cent of the enterprises' workforce and 30 per cent of its budget were directly employed in investment promotion.

Concluding, Mr Zammit Tabone said that the Kordin Business Incubation Centre was hosting 28 clients who employed 138 people and had a turnover of Lm0.75 million. It had a 75 per cent occupancy and the ME planned to expand it next year.

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